Carrying auto loans will be more expensive
While interest rates on auto loans didn’t see an immediate jump with the Federal Reserve’s announcement, future increases will eventually hit consumers in noticeable ways. With auto loans tied directly to the Fed’s benchmark rate, an interest rate increase will impact new loans (existing auto loans are fixed). In addition, with subsequent interest rate increases, the cost of vehicles themselves could rise as some dealers opt to decrease inventory in an attempt to skirt the cost of paying higher interest on the cars in their lots. Other dealers might stick to promotional offers and sales to incentivize sales, but these offers are reserved for those with good to excellent credit. (Shoot for 720 to land the best rates.)
Credit cards could see an interest rate creep
Your credit card company may have lured you in with the promise of a low interest rate, but there is something important you should understand about credit cards: Their rates are variable, not fixed. So an increase in rates could shift your overall financial picture in two notable ways — by increasing your monthly minimum payment and lengthening the amount of time it takes to pay off your debt.
However, maintaining a high credit score now might allow you to land a 0% introductory APR credit card offer and do a balance transfer before a change in the interest rate environment forces card providers to nix these offers. (Just make sure you read the fine print and fully understand the ramifications of not paying off your debt before the introductory rate expires.) Even the simple act of moving balances over to a low-interest card and aggressively paying down your debt now can have a big impact on how much you end up paying as well as your overall financial picture.
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